Wall Street mostly shrugged off blowout tech earnings last week. The reasons behind the tepid response to Apple and countless others centered around talk of ‘peak earnings’ and deceleration. Another explanation is simply that the market wasn’t ready to surge higher just yet, after it hit new highs heading into the heart of Q2 earnings season, which included a quick recovery from a mid-July pullback.

There could be more near-term selling, as Wall Street takes some big-tech profits off the table, even though any pullback might be blamed on Delta coronavirus variant worries and economic slowdown concerns. But barring the return of major U.S. restrictions or lockdowns, the bull case for the market remains in place despite rising prices.

The U.S. economy expanded beyond its pre-pandemic levels in Q2, with GDP up 6.5%. Meanwhile, consumer confidence popped in July to the highest level in 17-months. On top of that, the S&P 500 earnings picture and outlook continue to improve.

Plus, investors must constantly remind themselves that Wall Street will most likely be left chasing returns in stocks for the foreseeable future even when the Fed begins to lift rates off rock-bottom levels. History isn’t always a guide, but the 10-year U.S. Treasury yield has stayed below 3% for nearly all of the past decade.

August, therefore, appears to be a solid time to consider adding stocks. Today we looked at how to screen for highly-ranked stocks trading for under $10 a share…

Penny Stocks

One dollar or less used to be the common threshold for what we call “penny stocks.” Today, the SEC has expanded penny stocks to securities that trade for less than $5 a share. Many investors avoid these stocks because they are speculative in nature.

Meanwhile, penny stocks often trade infrequently and hold wide bid/ask spreads. These stocks also carry many other traits that, in many cases, cause excessive volatility. With that said, some penny stocks perform incredibly well, which helps them remain attractive.

Stocks Under $10

Moving on, let’s briefly discuss the next class of cheap stocks. Stocks that trade in the $5 to $10 range are generally less risky than their penny stock counterparts. Investors might be more likely to have heard of these companies or seen the tickers. They are, however, still inherently more speculative than many other higher-priced stocks.

Investors can obviously find winning stocks for under $10 if they are extremely selective. So today, we narrowed the list of thousands of these more speculative stocks down to a more manageable group of $10 and under stocks that might help boost your portfolio.

Screen Parameters

• Price less than or equal to $10

• Volume greater than or equal to 1,000,000

• Zacks Rank less than or equal to 2

(No Holds, Sells or Strong Sells.)

• Average Broker Rating less than or equal to 3.5

(Average Broker Rating of a Hold or Better.)

• # of Analysts in Rating greater than or equal to 2

(Minimum of at least two analysts covering the stock.)

• % Change F1 Earnings Estimate Revisions -- 12 Weeks greater than or equal to 0

(Preferably upward earnings estimate revisions, but definitely no downward revisions.)

Here are 3 of almost 20 highly-ranked stocks trading under $10 a share that made it through the screen today…

Sirius XM Holdings Inc. (SIRI Quick QuoteSIRI - Free Report)

Chembio Diagnostics, Inc.

LexinFintech Holdings Ltd. (LX Quick QuoteLX - Free Report)

Overall, all three of these stocks offer solid growth potential. Yet, it isn’t wise to pack your portfolio full of cheap, $10 or less stocks. Still, these stocks are certainly worth further investigation because grabbing a few of the top names from this list might bolster your returns. And let’s not forget that picking a few cheap stocks can also be quite fun.

Get the rest of the stocks on this list and start screening for the best stocks under $10 for yourself. And don't forget to backtest your strategy so you'll know how successful it's been before you put any of your money at risk.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance/.